Research 2023

Methane emissions from the energy sector remained near record highs in 2023, average globalsurface temperatures have been on a steady rise while the north and south poles continue to melt.These are just the tip of the iceberg when it comes to global warming, which continues to accelerate atworrying rates year after year. However, these issues are not merely environmental concerns but theyalso pose a significant economic threat. INSAP has found various studies that point out globalwarming could cost the world up to $24 trillion (£19 trillion) over the next 36 years.

The third plenary session of the 20th Central Committee of the Communist Party of China had on
18 July adopted the Resolution on Further Deepening Reform Comprehensively to Advance
Chinese Modernization. This landmark resolution outlines China’s long-term strategic plans and
commitment to over 300 reform initiatives designed to invigorate the economy and address various
social and security concerns. This sweeping reform agenda, also dubbed as China’s new “reform
blueprint,” marks a pivotal moment in the nation’s modernization efforts.

Malaysia, like many nations, finds itself at the precipice of a new era defined by unprecedented
geopolitical shifts, economic uncertainties, and societal challenges. The country’s ability to
navigate these complexities will be instrumental in shaping its future trajectory as the global
landscape is undergoing a tectonic shift, with the rise of new economic powers and the
resurgence of geopolitical rivalries.

Imagine a calm sea, a maritime landscape where Malaysia has charted its course for decades. Its ports, like lighthouses, have guided global trade, brought prosperity and solidified its position. This audacious plan to sever the Isthmus of Kra, creating a land bridge between the Andaman Sea and the Gulf of Thailand, threatens to disrupt this carefully crafted equilibrium. Cambodia’s proposed canal, a China-backed project, adds fuel to the fire. This ambitious undertaking aims to divert Mekong River trade away from Vietnam and potentially towards Thailand, potentially fracturing established trade routes in the region. The question that grips Malaysia, like a ship caught in a sudden squall, is this: will these new trade landscape capsizes its competitiveness in international trade?
Through the lens of a Thucydides Trap, Thailand’s potential windfall from the Kra Land bridge could inadvertently imperil Malaysia’s economic standing. The Kra Bridge, a shortcut between the Indian and Pacific Oceans, could siphon away shipping traffic, the lifeblood of Malaysian ports like Port Klang and Penang. Days shaved off journeys between Europe and East Asia could translate into a decline in cargo volume for Malaysia, a potential blow that echoes the anxieties Singapore felt during Malaysia’s ascendance.

For decades, Malaysia’s economic fortunes have been tied to the volatile tides of commodity prices. This overreliance on a narrow range of exports leaves us vulnerable to external shocks and hinders sustainable long-term growth. However, a glimmer of hope emerges from an unexpected source: tourism. The recent surge in tourist arrivals, with a staggering 32.5%1 increase compared to last year, presents a golden opportunity we cannot afford to miss. This is not just about generating revenue; it’s about seizing a low-hanging fruit to revitalize our economy and strengthen the Ringgit.

The Malaysian government’s push for e-invoicing intended to streamline tax collection and improve efficiency, presents a multitude of challenges that threaten to undermine its effectiveness. A closer look reveals a policy riddled with shortcomings that could disproportionately burden businesses, particularly small and medium enterprises (SMEs).
E-invoicing in Malaysia faces many challenges related to business readiness. The limited timeframe for integration creates a logistical obstacle and businesses must choose between manual invoice generation (slow and error-prone) or integrating their existing Enterprise Resource Planning (ERP) systems with the designated platform.1 This integration, whether through an API or a provider, requires internal IT teams to make system changes, conduct testing, and prepare for potential strain. This tight timeline, coupled with the complexity of integration options, raises concerns about the feasibility of businesses being fully prepared for the e-invoicing mandate.

The International Monetary Fund (IMF) has recently released a report outlining the significant impact artificial intelligence (AI) will have on the global workforce. The report suggests that as much as 40% of jobs worldwide could be affected by AI within the next two years, with advanced economies facing an even greater risk of disruption at 60%.

For most Malaysians, the rising cost of living is a constant worry that our ringgit just doesn’t stretch as far as it used to. Yet, when the government trots out the official inflation rate, a sense of disconnect often sets in. The numbers simply don’t seem to capture the daily struggles faced by ordinary citizens. This begs the question: is the inflation rate a reliable indicator of our cost of living, or is it a flawed metric that masks a harsher reality?

The answer, unfortunately, leans towards the latter. The Consumer Price Index (CPI) is the most common measure of inflation and tracks the average price changes of a fixed basket of goods and services and in this case, designed to represent typical Malaysian household spending patterns. But therein lies the challenge: “typical” doesn’t necessarily translate to everyone’s reality.